Can a Kidokinetics cooperative contribution exceed the Local Marketing Requirement?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
If a Cooperative is established applicable to the Kidokinetics Business, Franchisee must participate in the Cooperative. Cooperative contributions will be credited towards the Local Marketing discussed in Section 12.2 above. Cooperative contributions will not exceed the Local Marketing Requirement unless a majority of the Cooperative votes to increase that requirement.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, franchisees are typically required to contribute to regional advertising and promotional cooperatives if Kidokinetics establishes one in their area. These cooperative contributions are usually credited towards the franchisee's Local Marketing Requirement, which is the greater of $500 or 2% of gross sales per month on a rolling 12-month average.
However, the document specifies that a Cooperative can, through a majority vote of its members, require contributions exceeding the Local Marketing Requirement. This means that Kidokinetics franchisees could potentially be obligated to spend more on marketing than initially anticipated if the cooperative votes for a higher contribution.
This provision is important for prospective franchisees to consider, as it introduces a degree of uncertainty regarding their marketing expenses. While the standard franchise agreement sets a specific Local Marketing Requirement, participation in a cooperative could lead to increased costs if the majority of franchisees in that region agree to it. Franchisees should inquire about the likelihood of a cooperative being established in their territory and the potential for such votes to occur.